PARSIPPANY, N.J. — Pinnacle Foods has big plans for the Gardein business it acquired in the fourth quarter of last year. With estimated sales of $57 million in 2014, the brand offers a broad variety of frozen plant-based substitutes for traditional animal protein formats, such as chicken strips and beef crumbles.
“We continue to believe that plant-based proteins are at the tipping point of becoming mainstream, positioning Gardein, given its superior taste and texture, to benefit meaningfully from this growth trend,” said Bob Gamgort, chief executive officer of Pinnacle Foods, during a July 30 earnings call with financial analysts. “This is a category that’s going to be very big in the future, and it’s going to be very big for three reasons: health and wellness, but also sustainability versus animal protein, and affordability versus animal protein.”
Joining the Birds Eye brand in Pinnacle’s portfolio, Gardein builds on the company’s leadership in frozen vegetables with a range of products made with non-bioengineered soy and wheat, ancient grains and vegetables. In addition to leveraging the complimentary positioning of the two brands in the marketplace, Pinnacle plans to accelerate Gardein’s growth through expanded distribution, marketing and innovation.
|Bob Gamgort, c.e.o. of Pinnacle Foods.|
“This business continues to grow at a strong double-digit rate across both the traditional and natural and organic channels, with consumption in the quarter up more than 30% and our market share continuing to advance,” Mr. Gamgort said. “Importantly, Gardein continues to experience significant increases in velocity and distribution across all channels. And as we build the awareness for the brand, we expect both to continue to advance meaningfully.”
To keep up with Gardein’s growing demand, Pinnacle Foods is investing approximately $5 million to expand capacity in its Vancouver manufacturing facility this year. The company also is pursuing additional capacity expansion in the United States.
“Obviously, in the food industry, where we talk about lack of growth, it’s really nice to be working on a business where our biggest concern has been capacity expansion and to a degree it’s capped some of growth historically, and we’re going to make sure that doesn’t happen going forward,” Mr. Gamgort said.
Pinnacle plans to expand distribution of Gardein, which is currently offered in about 85% of the natural channel and about two-thirds of the traditional grocery channel, Mr. Gamgort said.
“Two-thirds would be on the low end of any of our business, actually probably the lowest of any of our businesses that weren’t regional in nature,” Mr. Gamgort said. “And so we see upside there. We also see upside that’s filling up in number of s.k.u.s (stock-keeping units). And then the big upside in all of this is building awareness trial, which we know we’ll need to repeat for this category. And that’s why we’re in investment mode on this business as we said at the time of the acquisition.”
Though Gardein is not the largest or longest-established brand in its segment, Mr. Gamgort said the products taste better than others on the market.
“Gardein still has a tremendous advantage in terms of taste and texture, and we’re going to continue to expand that capability into new formats and new flavors,” he said. “And that’s (the) piece that ultimately wins the day in food, which is taste.”
Pinnacle acquired Garden Protein International, the maker of Gardein, from Yves Potvin, founder and president, and TSG Consumer Partners L.L.C., a San Francisco-based private equity firm, for C$175 million ($153.8 million) in November.“This business has been running like this for years; we just happen to have the opportunity to partner with them starting in 2014 and be able to continue to feel this momentum,” Mr. Gamgort said. “But this isn’t a short-term phenomenon; this is a long-term phenomenon. They have so much upside, which is why we were excited about making that acquisition.”